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A Paradigm of Entrepreneurship: Entrepreneurial Management

Author(s): Howard H. Stevenson and J. Carlos Jarillo


Reviewed work(s):
Source: Strategic Management Journal, Vol. 11, Special Issue: Corporate Entrepreneurship
(Summer, 1990), pp. 17-27
Published by: John Wiley & Sons
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Strategic Management Journal, Vol. 11, 17-27 (1990)

A PARADIGM OF ENTREPRENEURSHIP:
ENTREPRENEURIALMANAGEMENT
HOWARD H. STEVENSON
HarvardBusiness School, Boston, Massachusetts, U.S.A.

J. CARLOS JARILLO
IMD, Lausanne, Switzerland

Corporate entrepreneurship seems to many entrepreneurship scholars a contradiction in


terms. This paper represents an attempt to bridge that gap. This is done by, first, reviewing
the literature on entrepreneurship, trying to summarize it in a few major themes. Second, a
view of entrepreneurship is proposed that facilitates the application of the previolus findings
to the field of corporate entrepreneulrship. Finally, a series of propositions are developed,
as instances of the kind of research that can be pursued by following the proposed approach.

Corporate entrepreneurship is a concept that has entrepreneurship construct? There is no doubt


acquired more and more importance in the last that, of late, entrepreneurship in general has
few years. Serious, scholarly work has appeared gained its status as a legitimate scholarly research
on the subject (see, for instance, Burgelman, subject, enjoying in addition much public interest
1983a,b, 1984a,b, Nielsen, Peters and Hisrich, (Vesper, 1988). This is evidenced by the appear-
1985; MacMillan, Block and Subba Narasimha, ance of new academic journals, such as the
1986; Hisrich and Peters, 1986; MacMillan and Journal of Business Venturing; by the fact that
Day, 1987; for some recent examples). General- mainstream journals carry more and more articles
interest books have also made an impact (Brandt, on related issues (Churchill and Lewis, 1985);
1986; Hisrich, 1986; Kanter, 1983, 1989), and and by the growth of interest in non-academic
some of them have even reached best-seller lists publications, which has been even faster (see
(Pinchot, 1985). The very existence of this issue McClung, J. J. and J. A. Constantin, 'Nonaca-
of the Strategic Management Journal testifies to demic literature on entrepreneurship: An evalu-
the credibility gained by the concept among ation', in Kent et al., 1982). As of today, there
experts in business management. is practically no business school without at least
Yet, when reading much of the literature on one course on entrepreneurship (Porter and
entrepreneurship as such, to which corporate McKibben, 1988).
entrepreneurship should be somewhat related The main traits generally believed to be
(perhaps as is a species to its genus), one finds associated with entrepreneurship, such as growth
an implicit definition of entrepreneurship as (Drucker, 1985), innovation (Backman, 1983),
something which is radically different from and flexibility (Birch, 1987), however, were
corporate management. Indeed, some writers deemed to be also desirable traits for large
find it to be the opposite of corporate management corporations, by theorists and practitioners alike.
(Vesper, 1985). Thus, the very concept of Thus the field of corporate entrepreneurship was
corporate entrepreneurship sounds to many born. There is a need, however, to establish
entrepreneurship scholars as something of an clear links between the fields of entrepreneurship
oxymoron. and corporate management, if the large body of
What is, then, behind that surge of the corporate research in the former is to benefit the latter.

0143-2095/90/050017-11 $05.50
( 1990 by John Wiley & Sons, Ltd.
18 H. H. Stevenson and J. C. Jarillo

Establishing such a link is especially important Considering what happens when entrepreneurs
because, as pointed out above, many entrepre- act: Studying the results of entrepreneurship
neurship scholars would consider entrepreneurship
as just what is outside of mainstream corporate The area of literature concerned with the question
management. of what happens when entrepreneurs act is
This paper attempts to establish this linkage. dominanted by economists. What matters here is
It reviews much of the literature on entrepre- the net effect upon the general economic system
neurship and groups these previous studies into a of the actions of the entrepreneur, and the role
few underlying themes which have relevance to he or she plays in the development of the market
corporate entrepreneurship. It then re-examines system. The earliest interest in entrepreneurship
definitions of entrepreneurship and advances its was expressed by Richard Cantillon, who focused
own definition of entrepreneurship that facilitates upon the economic role of the entrepreneur,
the connection of the previous research findings rather than the individual who performs such a
to the broader field of corporate management. role. Cantillon, who coined the word 'entrepre-
From that connection, propositions for research neur,' said that entrepreneurship entails bearing
and implications for the teaching and practice of the risk of buying at certain prices and selling at
corporate entrepreneurship are developed. uncertain prices. Jean Baptiste Say broadened
the definition to include the concept of bringing
together the factors of production. Thus the
THREE MAIN STREAMS OF RESEARCH entrepreneur is the protagonist of economic
activity in general.
The plethora of studies on entrepreneurship can Schumpeter takes a more specific view. He
be divided in three main categories: what happens considers entrepreneurship the process by which
when entrepreneurs act: why they act; and how the economy as a whole goes forward. It is
they act. In the first, the researcher is concerned something which disrupts the market equilibrium,
with the results of the actions of the entrepreneur, or 'circular flow.' Its essence is 'innovation.' He
not the entrepreneur or even his or her actions writes that 'the carrying out of new combinations
per se. It is generally the point of view taken by we call "enterprise"; the individuals whose
economists, such as Schumpeter, Kirzner, or function is to carry them out we call "entrepre-
Casson. The second current may be termed the neurs" (1934: 74). He thus distinguishes different
'psychological/sociological approach', founded by roles:
McClelland (1961) and Collins and Moore (1964),
in the early 1960s. Their work provides a useful
emphasis on the entrepreneur as an individual, We call entrepreneurs not only those 'indepen-
and on the idea that individual human beings- dent' businessmen in an exchange economy who
with their background, environment, goals, are usually so designated, but all who actually
values, and motivations-are the real objects of fufil the function by which we define the concept,
analysis. The causes of individual entrepreneurial even if they are, as is becoming the rule,
action constitute the primary interest of the "dependent" employees of a company, like
managers, members of boards of directors, and
researcher. Both the individual entrepreneur and so forth, or even if their actual power to perform
the environment as it relates to the motives of the entrepreneurial function has any other
individual entrepreneurial behavior are con- foundations, such as the control of a majority
sidered. It is the why of the entrepreneur's of shares. As it is the carrying out of new
actions that becomes the center of attention. combinations that constitutes the entrepreneur,
it is not necessary that he should be permanently
Finally, how entrepreneurs act can become the connected with an individual firm; many 'finan-
center of attention. In this case, researchers ciers,' 'promoters,' and so forth are not, and
analyze the characteristics of entrepreneurial still they may be entrepreneurs in our sense. On
management, how entrepreneurs are able to the other hand, our concept is narrower than
achieve their aims, irrespective of the personal the traditional one in that it does not include
all heads of firms or managers of industrialists
reasons to pursue those aims and oblivious to who merely may operate an established business,
the environmental inducements and effects of but only those who actually perform that function
such actions. (p. 74).
A Paradigm of Entrepreneurship 19

A few pages earlier he had spelled in detail what For the most part, microeconomics has
he understood by 'new combinations': neglected the study of the entrepreneurial func-
tion, simply by assuming that markets would
(1) The introductionof a new good-that is one eventually reach equilibrium. Even industrial
with which consumersare not yet familiar-or organization, the area of microeconomics that is
of a new qualityof a good. (2) The introduction arguably closest to actual management practice
of a new method of production,that is one not
yet tested by experience in the branch of (Porter, 1981), maintains an emphasis on supra-
manufactureconcerned,whichneed by no means firm variables by concentrating on the assumption
be founded upon a discoveryscientificallynew, that the structure of a given industry drives the
and can also exist in a new way of handlinga conduct of the firms in it. Nevertheless, the
commoditycommercially.(3) The opening of a importance of the 'entrepreneurial function' to
new market, that is a market into which the
particularbranchof manufactureof the country the actual development of the economy of a
in question has not previouslyentered, whether given country, following more or less Schumpeter-
or not this market has existed before. (4) The ian lines, has been studied extensively, starting
conquest of a new source of supply of raw with Hirschman: 'development depends not so
materials or half-manufacturedgoods, again much on finding optimal combinations for given
irrespectiveof whetherthis sourcealreadyexists resources and factors of production as on calling
or whether it has first to be created. (5) The
carrying out of the new organizationof any forth and enlisting for development purposes
industry,like the creationof a monopolyposition resources and abilities that are hidden, scattered
(for example, through trustification) or the or badly utilized' (1958: 5) These points of view
breakingup of a monopolyposition (p. 66). open the way for an empirical study of the effects
of entrepreneurship in the real economy. Birch
After Schumpeter's work, most economists (1979, 1987) has analyzed carefully the impact
(and many non-economists as well) have accepted of entrepreneurial activity in the overall economy
his identification of entrepreneurship with inno- through the actual creation of jobs.
vation. This represents a change from the previous Thus the study of the effects of entrepreneurship
tradition, where the term 'entrepreneur' meant has the following characteristics: (1) It abstracts
basically 'businessman,' as we saw. (See Kilby, from the individual entrepreneur and his or her
1971, for a summary of the term 'entrepreneur' actions to focus on the process by which those
in classical economics.) actions affect the economic environment. (2) It
Some economists interpret the results of recognizes the entrepreneurial function as respon-
entrepreneurship in a different way: instead of sible for economic improvement in our society,
disrupting the market equilibrium, thus advancing due to its 'innovations,' thus providing a theoreti-
the economy to qualitatively higher levels, the cal base for the 'advocacy studies' we shall discuss
entrepreneur works towards the accomplishment below. (3) It creates a basis for the distinction
in real life of the (theoretical) equilibrium between the roles of 'investor,' the 'manager,'
(Kirzner, 1979). The first tradition, represented and the 'entrepreneur.' Under this third torch of
by Cole (1968) at the Harvard Research Center analysis, entrepreneurship would then go well
in Entrepreneurial History, has stressed the beyond the mere creation of small businesses
aspect of innovation in the entrepreneurial (Scherer and Ravenscraft, 1984), thus paving the
function (see Scherer, 1984, significantly titled way for the legitimation of the concept of
Innovation and Growth, Schumpeterian corporate entrepreneurship.
Perspectives). The second, represented by
Kirzner, has stressed the informational aspects
Considering why entrepreneurs act: Studying the
of the entrepreneurial function; his argument is
causes of entrepreneurship
that the entrepreneur has a superior knowledge
of market imperfections, that he uses to his It is not surprising that entrepreneurs themselves
advantage. Leibenstein (1968), also based at have been subjects of interest. If entrepreneurship
Harvard, takes this approach, beyond merely is at the root of economic improvement, the
allocative efficiency. He makes the entrepreneur's implication that 'we need more of it' is not
basic function the destruction of pockets of difficult to draw. Researchers must, therefore,
inefficiency in the system. understand those who provide it. This is consistent
20 H. H. Stevenson and J. C. Jarillo

with a cultural emphasis upon the individual land's best-selling The Achieving Society (1961).
actor ('the cult of the individual'). It also fits The essence of this approach is that entrepreneur-
with a need to understand why some depart from ial behavior is dependent upon personal motiv-
the norms of average behavior: the dramatic ations which in turn are dependent on environ-
accomplishments of some entrepreneurs easily mental characteristics. McClelland started from
leads to the thinking that the individuals behind a psycho-sociological point of view, asking why
them must somehow be different and therefore some societies, at some points in time, had
of particular interest. exhibited high economic and social growth.
One level of inquiry into the 'causes' of He attributed that growth to the 'need for
observed entrepreneurial behavior conceptualizes achievement (n-achievement)' present in the
entrepreneurship as 'a psychological characteristic psychological make up of large parts of the
of individuals, which can be described in terms population in those societies. This point of view
such as creativity, daring, aggressiveness, and the has been very fruitful in that it has brought all
like' (Wilken, 1979: 58). It was probably started the theoretical resources of sociology to bear on
by The Enterprising Man, by Collins and Moore the field of entrepreneurship. Its results have been
(1964), who put at the core of entrepreneurship well-detailed accounts of how the environment
the 'desire for independence,' and who identified affects practice of entrepreneurship (see, for
as the causal variable certain Oedipal conflicts instance, Greenfield, Stricken and Aubey, 1979;
and neuroses of the entrepreneur. This early Delacroix and Carrol, 1983; Pennings, 1982a,b).
work has had much following, particularly among The practical consequences for public policy are
social scientists with a background in psychology. obvious, so much of the research undertaken
Brockhaus studied the locus of control belief of with this 'environment as motivator' approach
entrepreneurs (1975), and their risk-tendency has clear political overtones. In fact, much of
(1980). Marcin and Cockrum (1984), study what is being published right now falls into this
psychological characteristics of entrepreneurs advocacy approach (see, for instance, Backman,
across different countries. Hochner and Ganrose 1983 and Kent, 1984).
(1985) analyze the characteristics of entrepre- Many criticisms have been levelled at these
neurs, compared to their non-entrepreneurial attempts to understand the why of entrepre-
fellow co-workers; and a similar psychological neurship. First, it can be pointed out that it is
study is performed on female entrepreneurs extremely difficult to link particular psychological
by Rowen and Hisrich (1986). Cooper and or sociological traits causally to patterns of
Dunkelberg (1986) compare the path to entre- complex behavior, such as entrepreneurship
preneurship (inheritance, purchase, start-up) with (Cooper, Dunkelberg, and Woo, 1988). Indeed,
background attitudes characteristic of a large the literature suggests that no causal link can be
sample of entrepreneurs. The popular press established between any of the above-mentioned
has also written extensively about the 'special variables and entrepreneurship. At most, one
psychological characteristics of the entrepreneur,' could speak of correlates or antecedents of
generally understood as someone who starts- particular kinds of entrepreneurial behavior.
somewhat successfully-his or her own business. An added problem with this approach is that
An interesting twist is the study of the its constant focus on the individual entrepreneur
relationship between personal characteristics of has led, in many cases, to the identification of
entrepreneurs and the companies they set up. entrepreneurship with small business manage-
Smith and Miner (1983) analyzed the adequacy ment (Carland et al., 1984) and to the failure to
of different 'types' of entrepreneurs along the differentiate clearly between the individuals and
different stages in the development of a firm, organizations. These two points of view seriously
while Webster (1977) and Gartner (1985) focus impair the ability to transfer whatever knowledge
on the kinds of firms set up by different kinds is gained in entrepreneurship research to broader
of entrepreneurs. fields of management, such as corporate entre-
A second level of inquiry conceptualizes preneurship.
entrepreneurship 'as a socal role ... that may be On the other hand, the contributions of this
enacted by individuals in different social positions' 'entrepreneurship from its causes' approach are
(Wilken, 1979: 58). It was pioneered by McClel- extremely important, and cannot be forgotten in
A Paradigm of Entrepreneurship 21

any serious attempt at understanding corporate There is a vast popular literature along these
entrepreneurship. This approach has reminded 'how-to' lines, from functional studies on aspects
us of the following facts: (1) It is individuals who of interest to small businesses, to work on start-
carry out entrepreneurial activities, no matter ups, venture capital, etc.; as well as many
how they are defined. (2) Their characteristics practical, functional studies on how to set up and
(personality, background, skills, etc.) matter. run a few businesses successfully (see, for
(3) Environmental variables are also relevant, instance, Silver, 1983). There is also now emerg-
not only in that they open up opportunities to ing academic work focused on considering how
exploit market inefficiencies, as in the 'econo- entrepreneurs act. The study of strategy formation
mists' approach,' but also in the sense that in entrepreneurial firms is now a legitimate area
different environments are more or less conducive of inquiry (Mintzberg and McHugh, 1985).
to entrepreneurship, and can be more favorable Two important areas of research in this domain
to the new venture's success. So, apart from the are studies concerned with the different life cycles
possible social benefits that might have obtained through which new ventures pass and the
from some of the advocacy approach, emphasis problems entrepreneurs face as their companies
on the individual focuses the study of entrepre- mature (Gray and Ariss, 1985; Quinn and
neurship on its protagonist-the invidivual entre- Cameron, 1983); and studies that try to find
preneur, who was somewhat 'lost' in the previous predictors of success for new ventures. This latter
economic analysis. group attempts to identify predictors generally
by relating such success (or lack thereof) to
either the entrepreneurs' background, the chosen
Considering how entrepreneurs act: Studying
strategy, environmental considerations, or some
entrepreneurial management
mixture of these (Dollinger, 1984; Miller, 1983;
The two streams of research discussed above, Cooper and Bruno, 1975). Timmons and Bygrave
which have been characterized as 'entrepre- (1986), Roure and Maidique (1986), and MacMil-
neurship from its effects' and 'entrepreneurship lan, Zemann and Subba Narasimha (1987) have
from its causes,' deals with the 'what' and the all sought predictors of success in new ventures
'why' of entrepreneurship. It is now left to study funded with venture capital. They have found
the 'how'. Entrepreneurship can be considered that there are indeed variables other than just
from a practical point of view-what do entre- the personalities of the individuals involved, such
preneurs do, or, normatively, 'how to succeed at as the existence and nature of management
being an entrepreneur.' It is, in fact, what is teams, which affect the likelihood of a positive
between the 'causes' and the 'results': the outcome.
'managerial behavior' of the entrepreneur. Table It can be argued that this research on 'how' is
1 represents the three major categories entrepre- the most appropriate for a business school, since
neurial studies can be fitted into. it focuses on understanding (and, it is hoped,

Table 1. Contributions of disciplines to entrepreneurship

Line of inquiry Causes Behavior Effects

Main question Why How What

Basic discipline Psychology, sociology Management Economics

Contributions Importance of individual Entrepreneurship is the


function by which growth
is achieved (thus not only
the act of starting new
businesses)
Environmental variables are Distinction between
relevant entrepreneur and manager
22 H. H. Stevenson and J. C. Jarillo

improving) actual managerial practice. An exam- focused on the difference between high-potential
ple may help clarify this. The success in business ventures and others.
of the overseas Chinese has been well documented This dilemma is reflected throughout the
(see Limlingan, 1986, for an up-to-date analysis), literature. Some prominent researchers think that
together with that of other ethnic minority groups the present explosion in interest should not be
(Sowell, 1983). This can be analyzed from the diverted to anything other than new venture
point of view of the 'why,' and resultingly we creation (Vesper, 1985). Others see entrepre-
find answers such as the traditional closeness of neurship as something that is indistinguishable
the Chinese family or the need for achievement from innovation and as something that should
of a barely tolerated minority. But also the 'how' not be circumscribed to new ventures. It is seen
can be studied; then a network of both strong by some as the key to economic growth and
and weak relationships is found (Larson, 1988). productivity, and to the diffusion of knowledge
That network enables the participants in it (Baumol, 1986). This view of entrepreneurship
to work with much lower transactions costs would then also encompass the struggle of large
(Williamson, 1975), thus becoming much more firms to remain competitive (Kanter, 1989). The
efficient than larger, more formal competitors divergence in points of view is so great that it
(Jarillo, 1988). The first level of analysis provides has been said that even a 'unifying theme' is
little guidance for a would-be entrepreneur. The lacking (Kirzner, 1973: 281). Casson has pointed
second gives a clue as to how a start-up out that the task of reviewing the literature on
company can structure itself in order to be more entrepreneurship 'is rendered still more difficult
competitive. As will be seen later, this stream of by the fact that in most academic studies of
research promises the most relevance for the entrepreneurs the word "entrepreneur" does not
field of corporate entrepreneurship. appear in the title, whilst most of the literature
with "entrepreneur" in the title is either nonaca-
demic or is not about entrepreneurs at all' (1982:
xiii).
DEFINING ENTREPRENEURSHIP IN A Those attempts to pigeon-hole entrepre-
USEFUL WAY neurship do not contribute very much to our
understanding, for each of the aspects described
The extent to which the above studies can be above focuses upon one important factor of
taken to relate to corporate managment depends entrepreneurship. Generally speaking, it does
on one critical question, one which we have thus not appear useful, in managerial terms, to delimit
far avoided throughout the literature review: entrepreneurship by definining some economic
what is an entrepreneur? Does anybody who functions as 'entrepreneurial' and others as non-
starts a business qualify as an entrepreneur? Or entrepreneurial. Nor does it appear particularly
is an entrepreneur necessarily an innovator, helpful to base the decision of what an entrepre-
whether in a large or a small firm? If we take neur is upon studies of personality or character.
the first approach-that is, if we assume that The first exercise appears to be rather more
only those who start a business qualify-then semantic than practical. The second appears to
Ray Kroc of McDonald's or Thomas Watson of be equally fruitless, for individuals in our society
IBM would not qualify as entrepreneurs, although may attempt entrepreneurship and often succeed
they have been producers of all the 'good things' even if they do not fit the standards of academic
that entrepreneurs are supposed to do, such as judges as to their entrepreneurial personality or
job and wealth creation through the introduction sociological background. In sum, neither function
of new products and services. At the same time, nor character provide a useful basis for under-
only a few of those researchers interested standing entrepreneurship in managerial terms.
in entrepreneurial studies would consider the Defining entrepreneurship is, nevertheless, an
opening of a typical 'mom and pop' store an important question, albeit semantic, because a
entrepreneurial act worthy of study. The work definition too narrow may render much useful
of Reynolds, Van de Ven, Vesper, Cooper, research inapplicable to important areas, such as
among others, has provided insights into the corporate entrepreneurship. On the other hand,
start-up process; however, they have not always too broad a definition may make entrepreneurship
A Paradigm of Entrepreneurship 23

equivalent to good management, thus effectively 'entrepreneurial process'-we may be able to


dissolving it as a specialized field of study. make use of findings of previous research, while
The following view of entrepreneurship is then gaining insights on a crucial issue: how to foster
proposed to help take advantage of previous entrepreneurship, by learning the nature of the
research on entrepreneurship for the strengthen- entrepreneurial process.
ing of the corporate entrepreneurship field: This approach also allows us to deal with both
entrepreneurship is a process by which individual and organizational entrepreneurship,
individuals-either on their own or inside thus providing the necessary link between many
organizations-pursue opportunities without of the findings mentioned in the literature review
regard to the resources they currently control (need for innovation; influence of personal
(Stevenson, Roberts, and Grousbeck, 1989). characteristics and motivation upon the outcome
'Opportunity' is defined here as a 'future situation of entrepreneurial ventures; objective (although
which is deemed desirable and feasible.' Thus contingent) predictors of success, etc.) and the
opportunity is a relativistic concept; opportunities field of corporate entrepreneurship.
vary among individuals and for individuals over In the remainder of this paper, specific
time, because individuals have different desires propositions, relevant to corporate entrepre-
and they perceive themselves with different neurship research, practice and teaching, are
capabilities. Desires vary with current position derived from this view of entrepreneurship,
and future expectations. Capabilities vary depend- following some ideas found in Stevenson and
ing upon innate skills, training, and the competi- Jarillo (1986).
tive environment. Perceptions of both desires
and capabilities are only loosely connected
to reality. But, in any case, the essence of
entrepreneurship is the willingness to pursue TOWARDS THE ENTREPRENEURIAL
opportunity, regardless of the resources under ORGANIZATION
control. It is typical of the entrepreneur 'to find
a way.' Those ways are arrayed on a spectrum Our definition of entrepreneurship can easily be
from the behavior of a pure promotor to those applied to a corporation, and this application
of stodgy trustees (Stevenson and Gumpert, can be summarized in six logical propositions
1985). concerning corporate entrepreneurship. Thus the
This purely behavioral, situational definition field of corporate entrepreneurship would not
fits well with the common experience that the limit itself to the study of internal venturing,
level of 'entrepreneurship,' however defined, but also to the ability of corporations to act
often varies across the life of an individual, or entrepreneurially. The first proposition is purely
even across the different activities of an individual definitional. Together with proposition 2, they
in a given moment. This approach overcomes set the stage for the rest, more testable and
the dilemma posed by the question of whether research oriented:
or not entrepreneurs are to be found only in
start-up companies; we assume that we are Proposition 1: An entrepreneurial organi-
seeing the entrepreneurial phenomenon whenever zation is that which pursues opportunity, regard-
opportunity which requires resources beyond less of resources currently controlled.
those controlled is being pursued. The final
advantage of this point of view is that it As has been argued in the previous review of
concentrates on practice, thus leading us to study the literature, it is important to distinguish
and then teach basic entrepreneurial skills. We between individuals and organizations. At least
understand these skills not as traits of character in the case of entrepreneurial behavior, this
(hardly transmittable in a class room), but cannot be avoided by equating an organization's
as knowledge that results from training and direction to the wishes of its top managers: an
experience that has been accumulated over the opportunity is, by definition, something beyond
years and that will assist in problem-solving the current activities of the firm, and it is very
(Simon, 1984). Thus, by concentrating on entre- hard for top managers to 'force' that pursuit
preneurial behavior-by trying to understand the through the normal managerial mechanisms of
24 H. H. Stevenson and J. C. Jarillo

planning and control: it has to come from below. since they are on a company's payroll. Thus the
Therefore: positive inducements necessary to break the status
quo may have to be stronger (Baker, 1986).
Proposition 2: The level of entrepreneurship Indeed, several of the studies mentioned above
within thefirm (i.e. the pursuit of opportunities) on the background of individual entrepreneurs
is critically dependent on the attitude of point out that many of them come from relatively
individuals within the firm, below the ranks of dispossessed families.
top managment. But that extra inducement is hard to develop
within an organization. For that reason it may
The crux of corporate entrepreneurship is, be more efficient to lessen the impact of deterrents
then, that opportunity for the firm has to be to entrepreneurial behavior, particularly that of
pursued by individuals within it, who may have fear of the consequences of failure to the career
perceptions of personal opportunity more or less of the corporate entrepreneur. Given that the
at variance with opportunity for the firm. In would-be entrepreneurs enjoy an acceptable
addition, an opportunity can hardly be pursued, status within the firm, the treatment of failure
of course, if it has not been spotted. But spotting would appear to be a critical component of the
opportunities is certainly a function of the necessary motivation to pursue opportunity.
individual's abilities: his/her intimate knowledge Thus:
of the market, the technologies involved, custo-
mer's needs, etc. As a consequence, the kind of Proposition 4: Firms which make a conscious
jobs and positions the firm designs, the effort it effort to lessen negative consequences of failure
puts into developing generalists, able to make when opportunity is pursued will exhibit a
the necessary mental connections to detect the higher degree of entrepreneurial behavior.
opportunity, should have a measurable impact.
Thus: The third element in the pursuit of opportunity,
after its detection and the willingness to pursue
Proposition 3: The entrepreneurial behavior it, is the belief that it can, at least with some
exhibited by a firm will be positively correlated likelihood, be successfully exploited. Thus:
with its efforts to put individuals in a position
to detect opportunities; to train them to be able Proposition 5: Not only the success rate, but
to do so and to reward them for doing so. the very amount of entrepreneurial behavior
will be a function of the employees' (subjective)
But, as we have learned from the studies of ability to exploit opportunities.
the 'causes' of entrepreneurship, the individual's
motivations are decisive to the emergence of How is that ability increased? The findings of
entrepreneurial behavior. By definition, nobody the 'how-to' stream of research in entrepre-
will pursue an opportunity if he/she does not neurship offer insights. These include the impor-
want to, and we have seen argued that the very tance of investing the venture with enough
exceptional nature of pursuing opportunities managerial and technical ability from the begin-
without adequate resources makes it very difficult ning, found in the studies for venture capital-
for top management to 'force' that pursuit funded start-ups success. Widespread research
through the typical managerial mechanisms by suggests that different stages in the life of a
prespecifying task goals. venture may require different managers. The
There is a large body- of literature on moti- importance of teams in successful entrepreneur-
vation, not only in the field of entrepreneurship ships also follows.
(the 'why' question) but also in organization Directly deriving from the above definition of
theory and psychology. It is not redundant to entrepreneurship, a specific skill would appear
remark how important motivation is for the to be particularly important: that of making use
emergence of entrepreneurial behavior within the of resources that are outside the entrepreneur's
corporation. In most cases the individuals who control (Stevenson, 1983; Jarillo, 1989), since
must exhibit that behavior if the firm is to succeed entrepreneurial behavior implies pursuing oppor-
have already satisifed most of their basic needs, tunities regardless of the resources under control.
A Paradigm of Entrepreneurship 25

The vast amount of literature on networks can skills are highly relevant. Many of those skills
be applied here, from studies that show the are teachable. In fact, the implications for
usefulness of a social network in order to sustain teaching may well go beyond the field of
the new venture (Birley, 1986), to those that entrepreneurship, for entrepreneurial manage-
analyze how an efficient network can be sustained ment may be seen as a 'mode of management'
over the long-term (Jarillo and Ricart, 1987; different from traditional management, with
Birley, 1989; Lawrence, 1988). This literature different requirements of control and rewards
now can be seen as relevant to corporate systems, for instance.
entrepreneurship, for the ability to obtain access Practitioners of corporate entrepreneurship
to resources widely scattered throughout the would be well advised, following the proposed
organization, with no need to set up a previous, approach, to address all three key parameters of
rigorous appropriations procedure, greatly entrepreneurial behavior. Without an environ-
facilitates the pursuit of opportunities. Thus: ment that fosters the detection of opportunities,
no entrepreneurship will emerge. Equally, the
Proposition 6: Organizations which facilitate motivation to pursue opportunity, and its facili-
the emergence of informal internal and external tation, influence the final outcome. And there is
networks, and allow the gradual allocation and much evidence on at least some of the factors
sharing of resources, will exhibit a higher degree that influence these three parameters. The fact,
of entrepreneurial behavior. moreover, that they are not strictly independent
but, rather, reinforce each other (someone who
is willing to pursue opportunities will 'see more'
of them; someone who is confident in his/her
CONCLUSIONS ability to succeed will be more willing to
pursue them; etc.) points out the need for an
This paper shows how a particular conception 'entrepreneurial culture' within the firm, i.e. a
of entrepreneurship, based on the notion of 'track record' of fair treatment to internal
opportunity, may help link the vast and varied entrepreneurs.
research on that topic with the emerging field of Evidently, it is debatable whether entrepre-
corporate entrepreneurship. The proposed view neurship should be viewed as the pursuit of
understands corporate entrepreneurship as some- opportunity or as something else. After all, that
thing wider than just 'corporate venturing,' or is a matter of definitions. But it is believed that,
setting-up intra-firm 'venture capital' processes. by taking that approach, much of the previous,
Entrepreneurial behavior would be, following the separate research on entrepreneurship can be
economists' tradition started by Schumpeter, the useful for both individual and corporate practice,
quest for growth through innovation, be this and that specific avenues for research and
technological or purely mangerial. But pursuing teaching are opened.
opportunity, whether through specific company
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